Developing Land

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groundy
groundy Registered Posts: 495 Dedicated contributor 🦉
I have a client that is acquiring Land that has planning permission for six properties. The client intends on building the six properties and then renting them out, they have no intention of selling the properties.

My question is this: Would this be treated as invesment income just like if the houses had been purchased ready built? I know this seems obvious but the development part is muddying my brain.

And would they then be subject to CGT if sold at a later date, with an apportionment of the purchase price of the land added to the cost of the build?

Any thoughts would be welcomed, Cheers

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  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    Hmm, good one!

    My gut feeling is that the rental income for the properties is rental income, subject to the usual rules.

    The cost of the land is a capital expense against capital gains, and the building of the properties are improvements, also to be saved to go into the CGT comp.

    I think.
  • T.C.
    T.C. Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙‍♂️
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    I totally agree.
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